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According to the latest reports, home repossession has gone up to 71%. This is a 16% rise on the previous year’s figures during the same period. In the first half of this year around 19,000 homeowners have had their houses repossessed by the lenders. It is also estimated that house repossession will double in 2008 compared to 2007. This equates to 125 homes being repossessed every day in 2008 compared to 75 last year. These are alarming figures showing home repossessions rising sharply across UK.

It has been estimated that over 312,000 new mortgage accounts have entered into arrears between April and June, indicating that many borrowers are struggling to keep with the mortgage payments. Around 11,050 people have lost their homes already and figures continuing to rise. To depress the market further the Council of Mortgage Lenders have projected that the percentage of repossessions will increase over 50% and the number of repossessions will reach 45,000 for 2008.

The Government has warned that banks will be forced to take a more lenient approach to repossessions in order to keep families in their homes.The prime minister has introduced new rules to stop lenders from rushing into repossesing homes when homewners are unable to pay their mortgage. According to the new rules laid down by the Civil Justice Council, the lenders are to examine all other alternatives with homeowners before they start repossession action. Lenders will be encouraged to lower monthly repayments by extending the term of the mortgage or switching to an interest only mortgage. Borrowers will also be allowed to take a repayment holiday of two or three months, and the mortgage arrears will be added to their total loan. Also when a case reaches court, lenders will be required to explain what alternatives had they tried in order to resolve the problem before starting the repossesion proceedings.

As per the official data, the house prices have dropped by 8% and over 60,000 homeowners are pushed into negative equity every month owing to the steep fall in the house prices. Projections for 2010 are even more depressing, it has been estimated that one in six houses will pushed to negative equity if the current trend is to continue. Over 35% of people are changing their minds about buying a new home and they are even ready to forego their deposits.

In an effort to help the economy and the housing market, the bank of England has dramatically cut interest rates by 1.5%. It remains to be seen how this bold measure will pan out over time. It is now imperative on banks to pass on the full rate cut to its customers in order for the economy to reap the full benefits of this move. In these unprecedented times we need a consolidated effort and all the financial institutions need to come together to ride out this tsunami.

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